Accounting Chamber �Does Not Notice� Billions Borrowed from Central Bank for IBA Improvement

Baku/12.06.18/Turan: According to the data of the Accounting Chamber (AC) published the day before, as of January 1, 2017, the state debt was estimated at 13.471 billion manat. Thus, the amount of the state"s financial borrowings to cover the budget deficit grew by 26.2% last year.

The state debt of Azerbaijan as of January 1, 2018 was 17 billion 7.4 million manat or 24.3% of GDP (at the end of 2016 - 22.5% of GDP). Per capita national debt is equal to 1,718.3 manat (growth by 25.1% in 2017), the AC says.

Out of this amount, 15 billion 978.1 million manat (93.9%) accounted for external debt, and only 1 billion 29.3 million manat (6.1%) was for domestic debt. At the same time, in 2017, Azerbaijan's foreign debt increased by 35.9%, while the domestic debt decreased by 16.3%.

As noted by the economist Rovshan Agayev, the domestic public debt, which was slightly more than 1 billion US dollars, is greatly understated. The figure does not reflect the reality, because by issuing bonds belonging to the state-run Agrarkredit, loans were taken in the Central Bank in the amount of 10 billion manat for a period up to 2040. Responsibility for the return of this debt lies with the Ministry of Finance. "What is this, if not internal debt?" the economist wonders.

Agayev's opinion in an interview with Turan was confirmed by the financial expert Akram Hasanov, who noted that the government represented by the Ministry of Finance received a loan of AZN 10 billion from the Central Bank, and this amount is part of the domestic debt. On the question why the body of higher financial control in calculating the domestic debt did not take into account the billions borrowed from the Central Bank, the interlocutor called two options for the answer: either the money was returned to the country's main bank, or the information of the AC that the domestic debt is 1 billion 29.3 million manat is not true. "There was no information on repayment of the debt to the Central Bank," Hasanov said.

Recall that according to the decree of July 15, 2015 on measures to restore the IBA"s financial position to prepare the bank for privatization, the state-run non-banking financial organization CJSC Agrarkredit issued government-guaranteed bonds and uses proceeds from the issuance to purchase a number of depreciated and / or high-risk assets from the IBA. As a result of subsequent measures, the total amount of the IBA"s toxic assets transferred to Agrarkredit amounted to 14.7 billion manat by the end of 2017.

As for the external debt, according to official data, the country's reserves exceed the international obligations 2.3 times. However, this information raises doubts in expert circles, since official sources take into account foreign loans taken and used, while debt obligations on loans to be issued are not considered as such.

"In addition, the structure of foreign debt does not include foreign loans issued to state-owned companies. For example, on the website of the Ministry of Finance, external debt is set at $ 9 billion, while only about $ 8 billion is accounted for by SOCAR's recent commitments. However, the precedent with the International Bank of Azerbaijan has shown that, as a result, the state has to repay the external debts of state companies," the economist Natig Jafarli told Turan.

Transparency of SOCAR's reporting also leaves much to be desired, as the company presents general figures, there is no data on asset management, or dividends, and it is difficult to judge how profitable the SOCAR investments are, whether the costs have paid off, etc.

Azerbaijan's external debt has exceeded half of the country's GDP, independent experts believe, but the exact amount is unknown, since there are no exhaustive data on the debts of state companies. The lack of transparency also makes it difficult to analyze the international investment position, which represents the difference between the country"s assets and liabilities. -0-